The free movement of capital in the Union is a basic principle enshrined in the Treaty. The Community is pursuing its objective of eliminating all obstacles that could restrict free movement of capital between Member States and third countries by adopting this Regulation. The Regulation blocks the application of foreign legislation and its effects in order to protect the economic interest of the Community and those of natural and legal persons exercising rights under the Treaty establishing the European Community.

ACT

Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom [See amending acts]

SUMMARY

The aim of the Regulation is to protect the economic and/or financial interests of natural or legal persons against the effects of the extra-territorial application of legislation. The laws in question are specified in the Annex to the Regulation. The protection concerns international trade and/or the movement of capital and related commercial activities between the Community and third countries.

The Regulation applies to:

any natural person being a resident in the Community and a national of a Member State;

any legal person incorporated within the Community;

nationals of the Member States established outside the Community and to shipping companies established outside the Community and controlled by nationals of a Member State, if their vessels are registered in that Member State in accordance with its legislation;

natural persons being a resident in the Community, unless that person is in the country of which he is a national;

any other natural person within the Community, including its territorial waters and air space and in any aircraft or on any vessel under the jurisdiction or control of a Member State, acting in a professional capacity.

Any persons whose economic and financial interests are affected by foreign legislation person must inform the Commission accordingly within 30 days from the date on which it obtained such information.

If a court or tribunal or an administrative authority located outside the Community handed down a decision giving effect, directly or indirectly, to the laws specified in the Annex (such as the USA's "Iran and Libya Sanctions Act" of 1996), it would not be recognised or enforceable in any manner. The persons referred to in this Regulation shall not comply with any requirement or prohibition based on the laws specified in the Annex. Nonetheless, a person may be authorised to comply with the said requirements or prohibitions. This authorisation is given by the Council on a proposal from the Commission which is assisted by a Committee composed of the representatives of the Member States.

The Member States determine the sanctions to be imposed in the event of breach of any relevant provisions of this Regulation.